Euro push in Poland pitched as peace offering with EU
WARSAW â" Polandâs relations with the European Commission are terrible.
And thatâs exactly why a group of economists and the countryâs leading business paper this week launched a push for the country to adopt the euro.
The idea emerged from growing concern in Poland that, following Brexit and the election of pro-EU French President Emmanuel Macron, the bloc could consolidate around the 19-member eurozone. Itâs a somewhat quixotic notion given the political realities in Warsaw: The ruling Law and Justice Party, which rides high in the polls, views Brussels with skepticism and among some of its leading lights views the euro itself as a German-dominated instrument of economic oppression. But this is just one of the ways that Brexit is shaking up views on Europe across the 27 countries that are staying in the block.
The voices now calling for new thinking about the euro are invoking a different sort of oppression in isolation. Wit h the U.K. out, the group of non-euro countries includes relatively tiny Sweden and Denmark, and then mostly poorer Central and Southern European countries â" many of which have said theyâd like to join the common currency as quickly as possible. That could leave Poland on the sidelines.
The open letter in the Rzeczpospolita newspaper argues that it makes both political and economic sense for Poland to begin working toward adopting the euro â" a commitment it made in 2004 when it joined the EU.
âIf Morawiecki is sensible and doesnât feel the euro is Satan, then at least we could start on the technical work needed to eventually joinâ â" Witold OrÅowski, economist at PwC
The letter noted that rather than collapsing, the eurozone has emerged from recent crises and will form the core of the EU going forward. With half of Polandâs exports going to the common currency area, it also makes sense for Warsaw to have a voice at the European Central Bank.
The letter said applying to join the euro could reframe the debate about Poland in the EU. In December, the Commission launched an Article 7 procedure that could potentially see Poland lose its voting rights because of concerns over its adherence to the rule of law.
âStarting preparations to adopt the euro could become a way for Poland to get out of the impasse in which it finds itself,â the letter said, adding that the country should use the common currency to anchor itself in Western Europe. âEither in the future weâll be in the eurozone, or in the zone of Russian influence.â
The Polish government wonât exac tly embrace this push with enthusiasm.
âWeâre certainly not racing to the eurozone; itâs going through problems and has a lot of limitations,â Prime Minister Mateusz Morawiecki told the ultra-Catholic Radio Maryja last month. âWeâre in no hurry to give up our advantages, including the flexibility to react to potential crises.â
The government hasnât responded to the appeal, but the signatories hope it will have an impact on Morawiecki â" a former banker who was a member of the economic council advising Donald Tusk, the president of the European Council, when he was Polish prime minister.
âMorawiecki is generally a rational person,â said Witold OrÅowski, an economist at PwC and a past member of the economic council. âThis appeal isnât completely senseless. There is a chance it could have an effect.â
Poland fulfils the macroeconomic criteria for joining the euro â" a standard it also met back in 2007, the last time the rulin g Law and Justice party was in power. The idea was shelved back then.
Tusk briefly resurrected it in 2008, pledging to join the euro by 2012, but a short time later Lehman Brothers collapsed, setting off the global financial crisis. Tuskâs government didnât return to the euro and spent no political capital trying to convince Poles it made sense to join.
Although a poll by the CBOS organization last year found that 88 percent of Poles are in favor of the EU, only 22 percent want to adopt the euro.
That makes the domestic political case for launching a pro-euro campaign a hard sell.
Poland does fulfil the macroeconomic criteria for joining the euro | Damien Meyer/AFP via Getty Images
Polandâs tangles with the EU also place it in a delicate position if the government did change policy and asked to join the euro. One o f the criteria is independence of the central bank, and the government has made a calculated effort to put independent institutions under its political control.
âThere is no doubt that if Poland applies to join right now it would be rejected for a host of reasons,â OrÅowski said. âBut politics can look one way today and another way in two yearsâ time. If Morawiecki is sensible and doesnât feel the euro is Satan, then at least we could start on the technical work needed to eventually join.â
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